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Edited version of private advice
Authorisation Number: 1052328134194
Date of advice: 08 November 2024
Ruling
Subject: Early stage innovation company eligibility
Question 1
Does the Company meet the criteria of an Early Stage Innovation Company (ESIC) under subsection 360-40(1) of the Income Tax Assessment Act 1997 (ITAA 1997) for the period 1 July 20XX to 30 June 20XX?
Answer 1
Yes
This ruling applies for the following periods:
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
Early Stage Test
The Company is an Australian proprietary company incorporated in 20XX.
For the income year ended 30 June 20XX the Company incurred less than $1 million and earned less than $200,000.
The Company's equity interests are not listed for quotation in the official list of any stock exchange, either in Australia or a foreign country.
Background facts
The Company has no wholly or partly owned subsidiaries. The Company is not part of an income tax consolidated group.
The Company is not a foreign company within the meaning of the Corporations Act 2001 (Cth).
The 'test time' for determining if the Company is a qualifying ESIC, will be upon the issue of qualifying shares on a particular date or dates on or after 1 July 20XX, and on or before 30 June 20XX.
Product Development Stages
The Company is developing a unique platform that is not currently available in Australia.
Product Development
The company is in the process of developing and commercialising its platform for an addressable market.
Commercialisation Strategy
The Commissioner considers that this condition is satisfied.
High Growth Potential
The Commissioner considers that this condition is satisfied.
Scale up the Business
The Commissioner considers that this condition is satisfied.
Broader than Local Market
The Commissioner considers that this condition is satisfied.
Competitive Advantages
The Commissioner considers that this condition is satisfied.
Relevant legislative provisions
Income Tax Assessment Act 1997 subdivision 360-A
Income Tax Assessment Act 1997 section 360-15
Income Tax Assessment Act 1997 section 360-40
Income Tax Assessment Act 1997 section 360-45
ATO view documents
Not applicable
Other references (non ATO view)
Explanatory Memorandum to the Tax Laws Amendment (Tax Incentives for Innovation) Bill 2016
Other relevant comments
Not applicable
Key words
Early Stage Innovation Company
Tax incentives for Early Stage Investors
Early Stage Test
Principles Based Innovation Test